/Gunn drops hallmark plan to eliminate income tax, cut grocery tax

Gunn drops hallmark plan to eliminate income tax, cut grocery tax

Gunn’s last session version of the bill was introduced and was hailed as the most important legislation in his political career. The bill would also increase the general sales tax by 7% to 8.5%, and reduce the tax on car tags down by 35%. There are many differences between this year’s proposal, Gunn’s plan last year, and Gunn’s bill that died in the Senate. However, the main difference is that the sales tax on large goods like farming equipment, automobiles and other items has not been increased. These items are subject to a lower general sales tax rate of 7%. Gunn’s proposal for last year increased the tax on these items by 2.5% per $1, as well as the tax on items subject to 7% tax. Trey Lamar (House Ways & Means Chairman and close Gunn ally) acknowledged that there was opposition from manufacturers, farmers and other stakeholders to the increases in last year’s proposal. This year’s bill only increases the sales tax at 7% on most retail products, which goes up 1.5%. When the income tax is completely eliminated, it will reduce taxes by approximately $1.5 billion. Lamar stated that the bill was simpler than the one we had last year, and pointed out that it would be the biggest tax cut in state history. Lamar indicated that he may ask the House to vote on his proposal as soon as Wednesday. READ MORE: Hosemann does not like Gunn’s tax proposal. Are we in danger of Capitol gridlock? Lamar spent approximately five minutes explaining the bill to the committee on Tuesday. There were no questions. The vote was carried by voice vote without any debate. Republicans have more than the required three-fifths supermajority to pass tax proposals with Democratic support. However, there is a possibility that some Democrats may vote for it. Robert Johnson, D.Natchez Rep., said that he would read the document and find out what it was about. He did not rule out voting in favor of the package. Gunn, on the first day of the 2022 session last week, stated that his proposal to abolish the income tax would be his number one priority. Lamar reminded the Ways and Means Committee that Tuesday’s meeting was the first day of the 2022 session. The House Appropriations Committee was also meeting to approve a “historical” teacher raise. Lamar stated that there was money to do both due to last year’s 15.9% revenue growth. He also predicted double-digit growth in the current fiscal year. Tax cuts would eliminate taxes on income above $40,000 for individuals and $80,000 for married couples in January 2023. A married couple would be able to save $2,600 while an individual would only pay about half the amount. Based on inflation and state spending, the income tax remaining would be gradually eliminated over the next few years. The phase out could take as little as 10 to complete. The 7% grocery sales tax, which is the highest food tax in the country, will be cut to 5.5% in July, and then to 4% in the future. Lamar stated that the end result would be a tax system that rewards hard work and is fairer to everyone. READ MORE: Gunn fails to win support for income-sales tax swap Both Gov. Tate Reeves, and Lt. Governor. Delbert Hosemann is the Senate’s president and has supported tax cuts in the 2022 session. Reeves proposed that the state income tax be eliminated, which is responsible for approximately one-third state general fund revenue. This could be done in five years. According to the governor, he will oppose any plan that increases the rate of other taxes, such as Gunn’s. Hosemann did not give any details other than to state that there would be a Senate proposal. Hosemann did however indicate last week that he was not as interested as Gunn or Reeves in the elimination of income tax. Hosemann stated, “I believe you find our plan multi-dimensional.” “We don’t want to be hung up on one thing that means we eliminated something.” Gunn offered a plan last year which included a bigger increase in sales taxes to offset the reductions in income tax and grocery taxes. Lamar stated that offsets of this magnitude were not necessary due to state revenue growth. Due to complaints about high prices of license plates, the 35% reduction on the car tag was also added. The counties impose this tax. Lamar stated that the state would reimburse the counties for any revenue they lose as a result of the reduction in car tag taxes.